The no cash system
Another form of starvation budgeting and another way to
budget in order to reduce your debt and work towards
being debt free, involves removing the temptation of
spending money by making sure you have none in your
pockets. If you work somewhere where you have the option
to have your paycheck directly deposited into your bank
account, take advantage of it. By doing so, you will be
a lot less likely to take cash out when you get you
check and have to take it to the actual bank.
Make
an ATM trip each week only one time and take out your
allotted amount of cash you budgeted to get you through
each week. Typical things you will have to pay cash for
are gas and food. You may also allow yourself extra
money for things like lunch, coffee and things of this
nature. However, the idea is to cut back on unnecessary
items. Maybe you can cut out that morning trip to the
coffee shop and drink the coffee and read the paper at
the office or even at home in the morning. You want to
allow yourself the same amount each week with the
understanding that you may occasionally need extra for
things such as haircuts and such. Give yourself an
emergency fund of $20 a week for small unforeseen
expenditures – but do not spend it if you do not need
to.
So,
with all this talk about cash allowance, you are
probably wondering why this system is being called to no
cash one. This is a good question. After all, we keep
mentioning how you can give yourself a little extra here
and there. The name comes in when you run out, because
you get no cash when you do. You have to be disciplined
for this method. Many people have told me that they like
it only when they carry no credit cards. That is where
this system becomes a saver – if you are spending only
cash, you are not risking credit interest rated
purchases.
These days, check cards are very popular. They are a
credit like cards that withdraw money directly from your
checking account. If the money is not in your account,
you cannot buy. They carry no interest and some banks
have cash back reward programs even. This is almost the
same as carrying no cash, but requires you to also be
disciplined. Some people say they like using these cards
because they are not worried about carrying cash around,
they are protected against fraud and you to receive no
change when you use them. Never use the cash back when
using your check card and trying to budget. You will
loose track of money too fast. This will only work if
you are disciplined.
Some
banks have systems where you use you check card and the
bank will automatically round the amount up to the next
dollar and put the difference in a savings account for
you. This will work if you are not living penny to
penny. It is a surprise to many people who use this when
they get the savings statement in the mail and they have
saved money.
Just
remember that if you have a budgeted amount each week
that you cannot go over it no matter if you are using
cash or your check card. If you use a check card – be
certain to write each and every transaction in your
checking account.
Note: My Mother used to purchase items with her check
card and when she went to enter the transaction in her
checkbook, she would always round up to the next dollar
– this was before the banks started providing this
program automatically. When the end of the month came
and she balanced her checkbook, she always had extra
money for a rainy day. It just requires a bit of
discipline.
Of
course, this will not work for people who scrap penny to
penny – if you do use cash only and when you run out
that it!
When
ever you are using a starvation method as a means to
budget to reduce your debt, try having a routine each
week. Grocery shop once a week and on the same day, fill
your car up with gas once a week and such. This is very
useful in keeping track of just how much money you go
through and a great estimate for the next week to you
have to stick to. Always try to conserve. When you are
saving, you do not need to be driving all around town
either. Save the gas money – especially these days.
Part3…
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